Algeria Pursuing LPG Vehicle Conversions, Solar PV Build Out, & Energy Efficiency Programs As Solution To Falling Oil Industry Revenues

As a partial solution to falling oil industry revenues, the government of Algeria has unveiled a suite of new programs meant to improve the country’s financial situation, including incentive programs for vehicle owners who convert their vehicles to run on liquefied petroleum gas (LPG) rather than petrol/gasoline or diesel, a solar PV facility build out, and energy efficiency programs.

Accompanying these plans, the government of Algeria has banned numerous products in recent years (over 900 and counting), put a stop to public hiring and development projects, pursued the replacement of public lighting with energy efficient alternatives, and begun promoting solar thermal water heaters and housing insulation.

With regard to the solar PV project plans, the country’s government is reportedly now planning to launch a tender for construction of 3 projects totaling 4,000 megawatts (MW) in nameplate capacity.

For those who haven’t been following the situation much as regarding Algeria, the country has effectively hit peak oil, with oil and gas revenues having been halved since 2014 (obviously low oil prices have played a factor in the loss of revenue, not just “depletion never sleeps”).

For a country that sources around 60% of its budget from the fossil fuel industry, and exports practically nothing else (fossil fuels comprise around 95% of exports), this loss of revenue has been devastating.

To clarify, petrol/gasoline and diesel are largely imported, due to the fact that those fuels are refined elsewhere. The idea behind pushing LPG-vehicle adoption and conversions is that natural gas can be supplied locally rather than imported.

As it stands, Algeria imports around 2.9 million tones of petrol and diesel fuel a year — and these fuels are partly subsidized for consumers there. A switchover to natural gas, in other words, would allow for a great reduction in the government’s operating costs.

Reuters provides more information on the matter:

“Algeria is offering motorists incentives to more than double the number of cars running on natural gas by 2021 in an effort to reduce consumption of costly imported fuel amid strained public finances, officials said…The government is offering to cover partially the cost of car conversions for drivers, tax exemptions, and a stable retail price for LPG, of which domestic output is sufficient.

“In contrast, the pump price of subsidized gasoline and diesel has risen about 50% since 2016…Algeria plans to convert 500,000 vehicles by 2021 and 1.1 million by 2030, said Mohamed Bouzeriba, head of the National Agency for the Promotion and Rationalization of the Use of Energy. So far, only 200,000 cars run on gas out of a total 6 million.”

Accompanying these plans, the government in Algeria has been spending a lot of money in recent years to develop affordable housing as a means of perhaps avoiding the social problems that have hit some of its neighboring countries in recent years as the result of declining fossil fuel reserves, increasing water scarcity, and rising populations.

The country isn’t in an enviable position, hence the relatively novel plans now being pursued.

The Reuters coverage continues:

“Authorities also want to cut electricity consumption. State utility Sonelgaz still needs aid despite a 20% power price increase 2 years ago, the first in more than a decade. Demand for electricity has risen significantly in recent years due to infrastructure projects aimed at diversifying the economy away from oil and gas…Officials say measures may also include higher electricity prices for firms in the next few years.”

“Everyone must comply with rationalization, especially in administrative and public buildings, social housing, schools and mosques as well as with public lighting,” noted Energy Minister Mustapha Guitouni at the recent press conference on that matter.

Interesting plans, and perhaps a precursor for more to come? Will some of Algeria’s neighbors pursue such plans as well over the coming decades? Will the plans be effective at all? Who can say at this point.

I will note, though, that generally speaking, LPG vehicles are responsible for much lower levels of pollutant emissions than either diesel or petrol/gasoline powered cars are. This is no doubt especially true in Algeria where the diesel and petrol cars in question likely wouldn’t meet emissions testing standards in the US or Europe.

While the argument could perhaps be made that support for plug-in electric vehicles would be better, it’s at the same time difficult to imagine a realistic way to do that in Algeria at this time. Perhaps before too long there will be affordable electric vehicle options out there (likely released by a China-based company), but as of right now the idea seems untenable.